Q4 2024 SoundHound AI Inc Earnings Call

Okay.

Yeah.

Speaker Change: Hello, and welcome to sound Health fourth quarter 2024 earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: I asked the question during the session you will need to press star one on your telephone.

Speaker Change: But then her automated must advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: I would now like to turn the conference over to Scott Smith, Sir you may begin.

Scott Smith: Good afternoon, and thank you for joining our fourth quarter 2024 conference calls with them.

Speaker Change: Me today is our CEO and our CFO and the test Sharon Merrill.

Scott Smith: We will begin with some short remarks before moving to Q&A.

Scott Smith: We'd also like to remind everyone that we will be making forward looking statements on this call.

Scott Smith: Actual results could differ materially from those suggested by our forward looking statements.

Scott Smith: Please refer to our filings with the SEC for a detailed discussion of the risks and uncertainties that could affect our business and for discussion statements that qualify as forward looking statements.

Scott Smith: In addition, we may discuss certain non-GAAP measures.

Scott Smith: Please refer to today's press release for more detailed financial results and further details on the definitions limitations and uses of those measures and reconciliations from GAAP to non-GAAP.

Scott Smith: Also note that the forward looking statements on this call are based on information available to us as of today's date.

Scott Smith: We undertake no obligation to update any forward looking statements, except as required by law.

Scott Smith: Finally, this call is being audio webcast in its entirety on our Investor Relations website.

Scott Smith: Audio replay will be available following today's call.

Scott Smith: With that I'd like to turn the call over to our CEO Kevin Roger. Please go ahead Kevin.

Kevin Roger: Thank you Scott.

Kevin Roger: Thank you to everyone for joining the call today.

Kevin Roger: We had our strongest quarter on record with $35 million in revenue.

Kevin Roger: Presenting an increase of over 100% year over year.

Kevin Roger: With that we reached the top end of our revenue guidance range for the full year, which we raised just last quarter.

Kevin Roger: This speaks to the continued acceleration of our business in fact in the last five years, we have grown our topline at a compound annual growth rate of more than 50%.

Kevin Roger: And since going public less than three years ago, we have achieved significant growth in numerous key metrics.

Kevin Roger: Revenue increased by eight times quarter has increased by seven times and bookings increased by five times.

Kevin Roger: But the success we are achieving today. He didn't start three years ago. It began 20 years ago with a vision that is now becoming a reality.

We made bold predictions are Leon and stayed committed to the path we envisioned.

Kevin Roger: Built an enterprise grade platform that power some of the world's largest organizations.

Kevin Roger: This laid the foundation for us to capitalize on the fast growing voice AI market.

Kevin Roger: Our ability to innovate at a rapid pace and maintain the agility of a pure play high correctly structure allows us to deliver cutting edge solutions with speed accuracy and reliability.

Kevin Roger: We are incredibly excited that we recently unveiled the third pillar of our business our voice commerce ecosystem.

Speaker Change: Samsung has pioneered this vision for years and the concept is simple yet powerful.

The users are products powered by our voice assistant our pillar one can transact with businesses that are powered by our AI customer service offering our pillar two.

Speaker Change: This forms the foundation of Fanhouse, three pillar business strategy, and we expect it will increase our momentum further.

Speaker Change: At CES, we demonstrated the complete end to end experience of a driver discovering food options and placing an order have you got there in vehicle voice assistant using natural speech.

Speaker Change: This ecosystem creates value for all stakeholders.

Speaker Change: The end user it enhances convenience and safety.

Speaker Change: For merchants it delivers new leads and it creates a monetize double moment for sound Hound with revenue sharing opportunities for the Oems.

Speaker Change: The traction we received could not have been better within just a few weeks two notable Japanese automakers are pursuing poc's.

Speaker Change: Two German automakers are pursuing poc's.

Speaker Change: Several other notable Oems in the U S and Korea are pursuing POC.

Speaker Change: And multiple national chain restaurants are eager to be participating merchants.

Speaker Change: <unk> will add to our existing portfolio of prominent brands.

We expect this concept to create a flywheel effect for sound out with more Oems and device makers adapting our voice assistant and more businesses adopting our AI customer service.

Speaker Change: Let me share more highlights and business wins.

Speaker Change: In automotive our pipeline has never been this strong.

Speaker Change: We are in more and more rfps and poc's with new logos, including some of the largest automotive brands in the world. We have one for EV brands, including lucid and talk.

Speaker Change: And our existing customers are upgrading to Santa Chad you Arthur motive regenerative AI for additional royalties per unit.

Speaker Change: In healthcare, we had a very strong quarter landing four notable wins, including Duke health angled withheld and well start health system.

Speaker Change: We are especially excited it seems we are seeing strong repeatable business in this industry.

Speaker Change: In restaurants Burger King one of the largest <unk> in the World went live in the UK.

Speaker Change: We also saw expansion and wins with water breaker peet's coffee torches tacos churches, Texas chicken among others.

Speaker Change: We continue our expansion in four out of the top five pizza brands.

Speaker Change: We believe the pace of adoption of AI customer service in restaurants is increasing it.

Speaker Change: <unk> already being the largest provider with dozens of prominent brands and well over 10000 locations.

Speaker Change: In government and military we signed a contract with the city of Coral Springs, and continue to rollout our conversational AI capabilities with federal government agencies, such as a branch of the U S military together with general dynamics.

In retail we are expanding our reach across multi location retail brands in clothing fitness vehicle maintenance home services waste management and more.

Speaker Change: Some of our customers include <unk> at multiple planet fitness franchise groups at my gym among others.

Speaker Change: Our largest deal in Q4 wasn't energy, we were happy to add a new industry to our portfolio this quarter and signed with one of the largest electric utilities in the United States.

Speaker Change: We also recently announced a partnership with <unk> a leader in state of the art roadway intelligence technology to develop a first of its kind audio visual AI to bring hands free voice control to emergency vehicle technology.

Speaker Change: Moving to Agentic AI.

Speaker Change: <unk> is a leader in enterprise conversational AI.

Speaker Change: And our scale as a pure play AI software company positions us at the forefront of the agent take AI Revolution.

Speaker Change: With our proven conversational AI platform deep AI expertise and AI driven customer service solutions already embedded into hundreds of enterprise brands across industries. We are uniquely equipped to drive. This next wave of innovation and capture this growing market opportunity.

Speaker Change: Agentic AI is widely discussed, but many are still defining what it means and how it could be applied.

Speaker Change: At its core <unk> is a network of autonomous agents working together to achieve complex goals and execute actions.

Speaker Change: Each agent operate independently they make decisions execute tasks and collaborate to optimize performance.

Speaker Change: When a user sets a goal the system intelligently identifies the necessary steps orchestrates them in sequence and appliance reasoning to deliver the best outcome.

Speaker Change: This shift allows businesses to focus on defining objectives, while AI handlers execution, unlocking new capabilities and efficiencies.

Speaker Change: We believe the world is transforming from an ecosystem of Apis to an ecosystem up agents.

Speaker Change: <unk> AI introduces a new dimension to our platform expanding its capabilities and impact it is an inevitable evolution in AI functionality for our customers.

Speaker Change: Evolution comes as AI adoption moves from experimentation to necessity.

Speaker Change: Businesses are rapidly embracing AI and as they do.

Speaker Change: <unk> is in a position of strength.

Speaker Change: We have seen exciting results in the Agentic AI tools, we've created and are building and testing Agentic use cases in every major vertical.

Speaker Change: We will bring these to commercial deployment soon and this will be a game changer for our customers and the industry more to come in the near future.

Speaker Change: I'm also pleased to share that <unk> had a strong presence at CES, where we showcased groundbreaking technologies and AI solutions in our first ever booth at the show there.

Speaker Change: The buzz around our booth was electric with nonstop traffic from industry leaders and innovators in years to come and demo our latest advancements.

Speaker Change: In addition to unveiling the first ever in vehicles voice commerce ecosystem. Our CES participation also feature collaborations with Nvidia Perplexity Lucid motors LG and a broad range of restaurant partners. These.

Speaker Change: These partnerships highlights our leadership in delivering innovative voice solutions that are transforming customer experiences across industries.

Speaker Change: In addition, <unk> was featured in and videos partner passport program at CES.

Speaker Change: Across the event.

Speaker Change: <unk> partners were chosen to present their innovative work with Nvidia and we were honored to demonstrate our voice AI walked with them.

Speaker Change: This collaboration continues with our upcoming participation at Nvidia GTC tourism 25, there will be showcasing demos of our voice assistant leveraging generative AI on the edge with Nvidia drive Ags as well as our voice commerce ecosystem.

Speaker Change: We look forward to bringing more exciting updates and demos to GTC this year.

Speaker Change: Previously I have talked about opportunities with Polaris, our multimodal multilingual Foundation model.

Speaker Change: Let me share some of the impressive results of this groundbreaking technology.

Speaker Change: We compare ourselves against all the major players and prominent benchmarks, both public and private.

Speaker Change: We do this in different real world settings high noise environment and in settings, where speed and low latency are critical.

Speaker Change: We know that humans don't speak uniformity, so we consider accidents and background disruptions.

Speaker Change: The results have been amazing.

Against Google for example, we outperformed by north of 20% better accuracy.

Speaker Change: We also beat them on speed with four times better latency.

Speaker Change: Against <unk>, we start model, we are 26% to 36% more accurate on various benchmarks.

Speaker Change: To do this on models 110th of the size of what opening I use this.

Speaker Change: This is because of our ability to balance the right portions of data science and machine learning.

Speaker Change: And we continue to innovate to keep extending our lead.

Speaker Change: This is exciting technology and as more customers begin to adopt it the power of our AI only gains more interesting the market positioning us as a leader in innovation and performance.

Speaker Change: Our ongoing advancements strengthen our competitive edge driving further interest in accelerating our growth in the market.

Speaker Change: In closing it is becoming increasingly clear that the AI Revolution will be predicted is now here youre.

Speaker Change: We are seeing strong growth our customers love our solutions and our entire ecosystem is expanding rapidly.

Speaker Change: Within automotive and pillar, one we continue to add new logos, including with the Eds Tang store innovations such as Samsung chat AI automotive and our newly unveiled both commerce ecosystem, we're seeing massive interest.

Speaker Change: In pillar two aircraft customer service, we are gaining momentum with drive thru and phone ordering rollouts for major of two of our brands.

Speaker Change: We are excited to have just announced our breakthrough dynamic drive through platform that extends the restaurant ordering experience into calling texting scanning and directly into cars.

Speaker Change: AI agents are seeing strong adoption across smb's regional chains and enterprise brands.

Speaker Change: You've brought meaningful depth and breadth to conversational AI capabilities, along with a diverse range of verticals.

Speaker Change: And with the acceleration of our agent take AI capabilities, our customer service offering will continue to see accelerated growth.

Speaker Change: We are proud to have introduced our third pillar voice commerce last month.

Speaker Change: Filling our vision of emerging products and customer service into a powerful new product offerings, we have a winning position in all pillars of our business.

Speaker Change: As we bring another successful year to a close I want to express my sincere gratitude to all San unemployed for their exceptional achievements and contributions in making this all possible.

Speaker Change: With that I'll now turn the call over to any cash to talking about our financial performance key growth drivers and business outlook.

Speaker Change: Thank you, Kevin and good afternoon, everyone.

Speaker Change: Q4 revenue was $34 $5 million, increasing more than 100% year over year.

Speaker Change: For the full year, we grew by 85%, reaching the high end of our guidance range with $85 million in revenue.

Speaker Change: Before we dive into the financials for the quarter I'd like to reflect on 2024 and what we accomplished.

Speaker Change: Within the most dynamic and fastest growing market in tech we continue to execute our game plan added to our portfolio of solutions and innovated with distinction and one of the most significant technological shifts in over a decade and quite possibly in our lifetime.

Speaker Change: 2024 was a breakthrough year for <unk> as we diversified our business across products and industries laying the foundation for scalable growth.

Speaker Change: Time for voice AI is now.

Speaker Change: Today, we work with 30% of the top quick service restaurants, and 70% of the top financial institutions in the world.

Speaker Change: We added new automotive customers grew in health care and this quarter, we entered a new high seven figure deal with a large energy customer.

Speaker Change: We have significantly reduced our customer concentration.

Speaker Change: Our largest customer represented slightly more than 14% of revenue in 2024 versus comprising nearly half in 2023.

Speaker Change: We have transformed our business towards more predictable recurring revenue streams and have positioned ourselves for sustainable growth in 2025 and beyond.

Speaker Change: We continue to innovate with high velocity further reinforcing our leadership in voice AI the.

Speaker Change: Our balance sheet is strong we have capital flexibility to do the right things and our vision is now being realized.

Speaker Change: We finished the year with cumulative subscriptions and bookings backlog of nearly $1 2 billion up over 75% year over year.

Speaker Change: Mentioned before this metric is a measure of customer activity and gives current value to our existing contracts.

Speaker Change: The measure is based on contracts signed and gives a snapshot of the revenue we expect to realize over the coming several years.

Speaker Change: In and of itself, though.

Speaker Change: It is an incomplete measure as we have been noting new deals each quarter as well as significant cross sell and up sell opportunities, we're seeing having added new skus and use cases across verticals.

Speaker Change: We have a very diverse product portfolio with a massive addressable market that is growing rapidly.

Speaker Change: We see a number of near term serviceable markets, where we have great product market fit.

Speaker Change: We are going after a disease with accelerating momentum.

Let me give you a few examples.

Speaker Change: In automotive the 90 million plus global light vehicles produced each year gives us billions of dollars of repeatable revenue opportunity.

Speaker Change: We continue to gain share in this space and with <unk> and now voice Commerce, we believe it will only further accelerate.

Speaker Change: And restaurants, there are millions of global food establishments, representing tens of billions of dollars of serviceable market with over 75 billion transactions that can be automated for pickup delivery and drive their orders.

Speaker Change: Just looking at one small, but attractive and rapidly growing slice U S based drive throughs.

Speaker Change: We see roughly $5 billion in annual revenue available.

Speaker Change: We are expanding partnerships and catalyzing scale.

Speaker Change: We are leading the competition.

Speaker Change: In health care retail and energy sectors, there are trillions of interactions occurring annually across customer service scheduling and operational workflows.

Speaker Change: With millions of businesses and consumers relying on these industries daily this creates a massive pool of mission critical recurring revenue streams to enhance efficiency reduce cost and drive engagement at scale.

Speaker Change: <unk> will play a key role here.

Speaker Change: There are several other industries, where we can point to $1 billion, plus Tam and the fact that we have scalable products strong reference customers and direct and indirect sales motivated to win gives us great confidence in our ability to continue our hyper growth for years to come.

Speaker Change: To summarize our product platform is in the sweet spot of a massive technological shifts happening right now we have a differentiated competitive position in the markets. We are targeting are extremely large.

Speaker Change: So we are executing with tenacity to capture as much of these opportunities as we can.

Speaker Change: With that let me now discuss the fourth quarter financials in more detail.

Speaker Change: Q4 revenue was $34 $5 million up 101% year over year.

Speaker Change: In automotive, we continue to see double digit unit price expansion in the quarter driven by our regenerative AI solutions and overall product expansion.

Speaker Change: The automotive unit growth was hampered in Q4 by some of the overall macro pressures facing the industry, but our projections in 2025 are for continued strong growth based on the positive signs we are seeing already this year.

Speaker Change: And we are seeing strong double digit year over year growth in active cloud users, which in effect is our most important measure as it represents our ongoing both committed user base.

Speaker Change: Within customer service, we continue to scale signing meaningful new logos, such as Burger King in the U K and the aforementioned large energy company based in the U S.

Speaker Change: The quarter also benefited from the previously discussed acquisitions as mentioned last quarter, our scale and increased SaaS like revenue enables us to reduce our reliance on certain large point in time deals going forward directly improving price stability, and which will benefit the diversity and predictability of our revenue in future periods.

Speaker Change: Similar to what I noted last quarter, our customer concentration has significantly improved.

In the prior year, we had well over 90% of our revenue from just five customers now that ratio is roughly one third.

Speaker Change: In Q4, our GAAP gross margin was 40% down year over year, primarily due to the impact of the business and product mix of recent acquisitions.

Speaker Change: Adjusted for noncash amortization of purchased intangibles and employee stock compensation, our non-GAAP gross margin was 52% both GAAP and non-GAAP gross margins were down sequentially due to the inclusion of Amelia for a full quarter compared to only partial quarter in Q3.

Speaker Change: We are executing on the synergies identified from our acquisitions and are already starting to realize some of these efficiencies. Additionally, as we automate more workflows, we expect our product mix to drive meaningful improvement in our gross margins ultimately driving us back to the 70% plus levels we have here.

Speaker Change: Storage really realized.

Speaker Change: Last quarter I mentioned, we would review acquired customer contracts and move away from deals that Didnt meet our long term profit objectives, and we started to prune that portfolio in the quarter. The impacts will be seen over time, and we have more to do there will be revenue impacts, but it will drive healthier margins and a better long term profitable growth profile.

R&D expenses were $24 million in Q4, reflecting a 60% year over year increase primarily driven by our acquisitions.

Speaker Change: We are committed to innovating our products to stay at the cutting edge of this fast moving market.

Speaker Change: <unk> developed an architecture capable of arbitrator multiple L. L. M. Both our internally trained models and knowledge domains as well as third party <unk> to deliver the best possible customer experiences <unk>.

Speaker Change: <unk> and our key initiatives Polaris is a priority and you can see why based on the differentiation against peers.

Ron: Ron talked about.

Ron: The massive amount of data we have is another focus area, where we continue to invest we use this data to consistently train our models in various industries, which we see as a key differentiator versus our competition further deepening our mode.

Ron: Sales and marketing expenses were $9 6 million in Q4, reflecting a 114% year over year increase primarily driven by acquisitions. We are investing in growth with increased marketing campaigns and overall brand and demand. Gen. Efforts. This includes targeted investments in the go to market motion of Amelia to attack the tremendous.

Ron: The opportunity, we see across multiple verticals.

Ron: We are continuing to invest in direct and indirect sales capabilities and customer success to go after new customers incubate existing relationships and ensure we effectively cross sell and upsell across our full portfolio, where we've seen some really promising early signals.

Ron: G&A expenses were $16 $4 million in Q4, reflecting a 115% year over year increase primarily driven by our acquisitions on a sequential basis, we were up by 8% mainly due to the Emilia is full quarter impact over the long term, we expect leverage in our G&A line, although we will.

Ron: To invest in system and process improvement to enhance our control environment and modernize our capabilities, including the consolidation and integration of multiple ERP and other systems that have stemmed from our different acquisitions in 2024.

Ron: Our financials also show a charge related to the change in fair value of contingent liabilities significantly impacting our GAAP loss from operations in Q4 by approximately $220 million.

Ron: Let me give you some context here while this is not a new line item. This stems from the acquisitions. We have completed to note. This is a non operating and non cash expense.

Ron: Significant change is due to the required mark to market accounting and reflects the strong increase of our stock price at the end of 2024. This balance will fluctuate from quarter to quarter, sometimes a significantly as was in Q4 and as such is excluded in our non-GAAP results. We also had noncash.

Ron: Employee stock compensation of $9 9 million and noncash depreciation and amortization, including the amortization of intangibles of $7 9 million in Q4, all of which are included in our GAAP results. Please note that we expect stock based compensation to increase in 2025 with the full impact of the acquire.

Ron: Employee equity awards.

Ron: As a result, adjusted EBITDA was a loss of $16 8 million in Q4 the.

Ron: The year over year change was driven primarily by strategic acquisitions of which we are still early in our integration efforts and growth investments, we have been making across the business.

Ron: <unk> was $1 $2 million expense for the quarter. This includes interest expense of $1 $3 million.

Ron: GAAP net loss and EPS were impacted by the change in fair value of contingent liability as mentioned before non-GAAP net loss was $19 million and non-GAAP net loss per share was <unk> <unk> in the quarter.

Ron: This also adjust for noncash depreciation and amortization M&A transaction costs stock based comp and other noncash items.

Ron: Our cash and equivalents at year end was $198 million, we paid down the remaining outstanding debt from the acquisition in Q4. So we ended 2024 with no debt on the balance sheet.

Ron: Last month, we announced a new S three and at the market equity program to Opportunistically raise capital and to provide flexibility we will be thoughtful about when we execute on the program and as I've said before our capital position is strong and we do not need incremental capital to achieve the breakeven operating profile, we expect to.

Ron: To deliver this year.

Ron: With that let me discuss our financial outlook.

Ron: We are starting 2025 with momentum.

Ron: We have a strong pipeline and are scaling across our product and business areas, we are adding new capabilities and delivering for our existing customer base.

Ron: Customer demand continues to grow and our pace and capturing that demand at scale is accelerating.

Ron: And our visibility into the near term opportunities is improving.

Ron: So even though it is early in the year for 2025, we feel confident increasing our revenue outlook to $157 million to $177 million.

There will be a ramp in revenue through the year, given the nature of our customer base underlying seasonality and expected large deal timing in prior years, we delivered roughly 30% of our annual revenue in the first half we think we will deliver closer to 40% in the first half of this year. So the quarterly mix will continue to be backend loaded.

Ron: <unk>, but less so than in prior years as our mix of recurring subscription business has increased.

Ron: Overall this outlook affirms our expectation of another year of very strong growth.

Ron: We also remain committed to our path to profitability.

We will get there through continued scale and through surgical high ROI investments.

Ron: We will also continue to drive the acquisition cost synergies and build on the positive early integration progress we have seen occur.

Ron: Accordingly, we continue to expect to achieve adjusted EBITDA profitability by the end of 2025.

Ron: In closing 2024 was a catalyzing year for us in many ways and our business is much stronger as a result.

Ron: We enter 2025 would tailwind within a market that is ripe for our AI solutions.

Speaker Change: In this new journey I L. O M World. We believe natural language conversations are the next major transformation and how humans will interact with technology and voice AI is the killer App.

Speaker Change: Voice AI is what we do we have pioneered and innovated in this space since our origins.

Speaker Change: As we look forward, we will continue to bring new groundbreaking offerings to our customers to help them excel in this new technology era.

Speaker Change: Thank you and now we will move to Q&A.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please stand by while we compile the Q&A roster.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Our first question comes from the line of Gil Luria with D. A Davidson your line is open.

Speaker Change: Yes. Thank you good afternoon.

Speaker Change: There's been some pretty big breakthroughs recently and the efficiency of our.

Speaker Change: The AI models in there.

Speaker Change: Those models are open source.

Speaker Change: Getting a lot smaller.

Speaker Change: I know you you develop your own model you use other models as well.

Speaker Change: The advanced the advances in the technology make it possible for you.

Speaker Change: Especially in the restaurant drive through business too.

Speaker Change: To put more of the intelligence on the device.

And therefore, maybe reduce latency make it more efficient and improve the performance is this something where you can leverage the recent advances.

Speaker Change: Absolutely in fact, we predict that this two years ago when we.

Speaker Change: Sure.

Speaker Change: Created our architecture to allow them to bring out of London to our conversational AI, we predicted that the model will become better and cheaper.

Speaker Change: And there will be multiple models that will be put out different things some of them will be made by downtown.

Speaker Change: By third party content would be open source. So we created the architecture in the way that we can benefit from it as these advances.

Speaker Change: Our realized.

Speaker Change: So those are absolutely good for us.

<unk>.

Speaker Change: The most immediate impact is that our platform becomes more accurate and the running cost goes down.

Speaker Change: A lot of.

Speaker Change: Our reliance on third party API.

Speaker Change: We bring those in house, including our own models or the open source ones that'd be fine tune.

Speaker Change: But as you said also if you can bring it to the edge, we had a great demo.

Speaker Change: Yes sure.

Speaker Change: Showing the entire.

Jeremy: Lars language, my thanks, Jeremy and Sanjay without cloud connection.

Speaker Change: Yes, Lucky was very impressed.

Jeremy: I'm, sorry, I wasn't able to make it.

Speaker Change: Tesh for you that that backlog number has grown quite a bit could you give us a couple more parameters around it.

Jeremy: Whats the duration of that backlog number maybe.

Jeremy: By vertical or by pillar what are the different pieces in that I think you said $1 2 billion.

Jeremy: Sure.

Jeremy: Duration is pretty consistent with prior quarters about six years I think it's slightly north of six years.

Jeremy: By vertical I'll say continue to have a good balance.

Jeremy: If you go back.

Jeremy: Year, and a half ago. It was heavy in the automotive automotive continues to penetrate and grow very excited coming out of CES and what we announced with voice commerce that we're getting great traction with our.

Jeremy: A lot of deals gave I mentioned some of those in the prepared remarks, where we've seen the outpaced growth now for several quarters running has been in the restaurant space.

Jeremy: And.

For us that.

Jeremy: The deals that we're signing continue to grow its really continues to be about pace and scale and how we can ramp with them and now with Amelia and the mix and I mentioned, some new customers in new industries at.

Jeremy: That we're really excited about but across predominantly healthcare financial services. There is a real strength.

Jeremy: <unk>.

Jeremy: New deal with the energy and the energy sector that we're excited about we think there's a long runway that we can capitalize on there. So what's wonderful about that metric call. It this year as compared to when maybe we were talking about it last year is twofold number one.

Jeremy: The diversity point across industries voice AI is agnostic it can influence.

Jeremy: And benefit many different types of customers.

Jeremy: The strength of it and then just the shift I mentioned in the prepared remarks around more recurring revenue basis in that metric. That's definitely that composition is grow and you see that a bit with our mix towards more pillar two revenue.

Jeremy: So I think all of that portends just continued strength.

Jeremy: Possibilities and I also mentioned on the call that that's just the starting point for US we continue to aggressively go after Neil new deals that are not reflected in that metric.

Jeremy: Now, having particularly post some of these acquisitions cross sell and up sell opportunities really exciting early days on.

Jeremy: Our restaurant customers really leaning into some of the solutions that we got in the conversational AI with the Emilia acquisition or some of the Emilia customer base now leveraging some of our smart answering capabilities that we built up on the <unk> side. So really we can incubate a lot more with that existing customer base and certainly are continuing to grow and add.

Jeremy: Mark.

Mark: Got it thank you very much.

Jeremy: Thanks, Thank you.

Jeremy: Please standby for our next question.

Speaker Change: Our next question comes from the line of Thomas Blakey with Cantor Your line is open.

Thomas Blakey: Hey, guys. Thanks for taking my questions here.

Speaker Change: It's great to hear about all of those poc's off of CES and probably even work you've done prior to that could we maybe.

Speaker Change: Click there and just talk about what the typical time to revenue is four four a POC may have a follow up.

Mike: I'll start and Mike.

Speaker Change: So.

Speaker Change: Automotive we can go we can ramp you'll see us very quickly, especially with the ones that we are live in the market for example last year over year on several POC speeds Atlantis, bringing.

Speaker Change: Bringing Joseph AI and <unk> into the cars.

And the result was incredible and they decided to actually go up.

Live with other units.

Speaker Change: With the kind of on track AI that brings drive AI into it so.

Speaker Change: At this time do you actually have a lot of new Oems as I mentioned to Japanese Oems and two German Oems, they're all Oems from you I think courtyard going throughout the northeast.

Speaker Change: So the timing of UBS.

Speaker Change: Right Jonathan in the first half of this year for most of those.

Speaker Change: That would be charged for <unk>, but.

Speaker Change: That vision is so big in this case that.

Speaker Change: We want to prove it as quickly as possible.

Speaker Change: And.

Speaker Change: You asked about revenue impact.

We actually don't have.

Speaker Change:

Speaker Change: The third pillar monetization revenue is not as an upside this year.

Speaker Change: But the impact of the three pillar vision is already being realized because.

Speaker Change: Our people are one or two customers are more eager to adopt our platform because they see that path to monetize them all moments from the third pillar.

Speaker Change: Yes, maybe Tom if I will just add I'm not sure. If your question was specific to the PSA. So we're talking about coming out of CES, but maybe if it's okay. I'll just expand your question more broadly how we see ramping of our customer base. They are slightly different depending on the industry and product vertical so within the automotive sector. Traditionally if we get into a deal and we try to roll out and we get royalties on <unk>.

Speaker Change: Or is there a shift we get the royalty so as we get more units out market. That's what we that's where we generate revenue. That's historically been in the model with restaurants, I think I've mentioned in prior.

Speaker Change: How.

Really depends on the customer one where there is drive thru, sometimes you have hardware requirements and we have to go through the process of making sure the drive through there or have the proper microphones headsets display boards and we've done a lot of innovation to really help our restaurant customers scale. There for example, we've innovated.

Speaker Change: With like a smaller footprint.

Speaker Change: Most with the display board that doesn't have the same permitting requirements and that allows us to go faster. So there's a lot of experimentation in trial and working with great partners on the hardware side to provide that scale on the phone ordering for restaurants, it's a little bit more of you can go much faster, we integrate with point of sales and we can we can scale. It technologically very quickly sometimes the.

Speaker Change: And restaurants could be the key.

Speaker Change: Corporate.

Speaker Change: Do they have franchise franchisee that we need to have multiple conversations with this corporate own all of the locations or it is corporate have greater influence. So those are some of the gating factors and then when we get into the enterprise business, where we're selling and interactions.

Speaker Change: We can deploy the product pretty quickly we have a professional services organization that specializes in getting product ramped up and then really again kind of depends on the scale of interactions.

Speaker Change: As we can get more and more use cases, we can move from customer facing two internal employee facing thats ways, where we scale.

Speaker Change: The interaction based upon which we generate recurring revenue so so that.

Speaker Change: Sorry to expand your question to something more.

Speaker Change: Broad, but theres different dimensions to all of the verticals.

Speaker Change: No that was a great review and I appreciate that more than more than you know and yes. It was asking you gave out a lot about the <unk>.

Speaker Change: <unk> from the pillar three and it was great to see the flywheel emotion already impacting pillar one be exciting to see what that unit ramp looks like in pillar one in the coming year, maybe as a follow up.

Speaker Change: The seven figure deal.

Speaker Change: The energy vertical it sounds like you really exciting in terms of expanding into new verticals. Like this first of all from a administrative perspective, the test maybe any any any kind of like what's the economic impact in the current quarter or early 'twenty five that'd be helpful.

Speaker Change: What is this kind of portends came on for what sound, how it's bringing to outside of the core auto restaurant and fin serve and health care verticals that would be helpful. Thank you very much.

Speaker Change: Sure I'll hit the first part.

Speaker Change: Multiyear deal what is great is the.

Speaker Change: The.

Speaker Change: The scale is really much larger than our traditional deal so.

Speaker Change: Ms of interactions and the capabilities that we're bringing.

Speaker Change: It is the type of customer that pays early so that's great. We've got actually there is from an economic from a cash perspective, there is accelerated cash collection.

Speaker Change: That's a strength for us, but generally speaking yes.

Speaker Change: Your point of the enterprise business has given us great penetration into financial services, where we talked about being in seven of the top 10 financial institutions and then in healthcare, we're really got a large runway and we're investing because we see a lot of opportunity and you can just imagine in People's personal interactions you got to set an appointment sometimes you got to get some results.

Speaker Change: Need to have a conversation with a nurse or a doctor like all these interactions are very complicated through the traditional models and thats what were monitored that modernizing making easier for people and now in energy, whether you need to check as your power upper all of these types of things. The use cases are tremendous and our platform scale scales very well. So we're excited then.

Speaker Change: Again multiyear deal. So we think we can benefit from that relationship over the long term and hope to expand even further.

Speaker Change: Yes, so very repeatable.

Speaker Change: Offering so we can go to other things that are.

Speaker Change: Companies and offer them.

Speaker Change: More efficient way.

Speaker Change: And.

Speaker Change: We are very proud and excited.

Speaker Change: Expanding beyond restaurants, when we started our AI customer service.

Speaker Change: Initiative number two years ago, we started with restaurants versus restaurants to us.

Speaker Change: Express and Amazon They started with books first and how they sell everything let's start with restaurants to its really route and then expand to other vertical then now we are well beyond restaurants Vrs.

Speaker Change: Hearing healthcare financial services government government military and retail and we just added energy.

Speaker Change: Again, all of those are repeatable and getting faster adoption is getting faster.

Speaker Change: Great to see the successes. Thank you for answering my questions.

Tom: Thank you Tom.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Mike Latimore with Northland Capital market. Your line is open.

Speaker Change: Yeah, great. Thank you.

Speaker Change: On Amelia.

Speaker Change: They have both kind of customer engagement and then more internal.

Speaker Change: Support use cases are either one of those sort of more pronounced in the pipeline.

Speaker Change: The customer service is more pronounced.

Speaker Change: But.

Speaker Change: And that also is more aligned with covenants.

Speaker Change: Our core technology and history.

Speaker Change: But the idea of automation, it's also very strategic because a lot of those customers.

Speaker Change: Can be customers of bulk.

Speaker Change: And we can package and upsell them and give them incentives to adopt both of them.

And Theres, probably just to give you a couple of dimension. So one is they have the customer facing they also have employee facing internal to enterprises. That's an opportunity that it's also there and then certainly the TSM.

Speaker Change: So so all of those are there. They also mentioned previously the.

Speaker Change: The mix, obviously, we're investing in we valued these SaaS like software.

Speaker Change: <unk> profile that they had but they also have professional services that for.

Speaker Change: For us allows us to scale into enterprises and customized implement.

Speaker Change: And then they also have escalation support which for US is the area I mentioned in the prepared remarks, where we're looking at making sure we are.

Speaker Change: And all of those contracts makes sense in the long term profitability standpoint, but what is wonderful with that and what we value tremendously is the data and we get real time production data that we can leverage improve our models and then automate and scale that over time.

Speaker Change: Got it.

Speaker Change: And then just on the <unk>.

Speaker Change: [noise] pricing you're contracting model is at most kind of your under that SaaS model, where you get a <unk>.

Speaker Change: Annual subscription or is there an element that's kind of usage based.

Speaker Change: Yes, there's a bit of mix, but definitely interactions and there is different depending on the vertical and depending on the customer there is either interaction based sometimes its containment based on success based I mean generally speaking, obviously, we're creating AI outcomes to try to help deliver value for the customer in a lot of times the customers looking for hey, I'll pay more.

Speaker Change: For something that successfully contained.

Speaker Change: Our query.

Speaker Change: So it is it is generally moving towards that SaaS like subscription models, but there are sort of up until a certain volume.

There is a certain number of interactions that are included and then above that there is increased pricing.

Speaker Change: Yes, okay. Thank you.

Mike Latimore: Thank you Mike please.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Scott Buck with HC Wainwright <unk> Company. Your line is open.

Scott Buck: Hey, good afternoon, guys. Thanks for taking my questions.

Speaker Change: The first one when I think about.

Speaker Change: Secondary verticals, whether it's financial services retail Telecom health care, how are you prioritizing those and do you have the capacity to go after all at once.

Speaker Change: So I will start.

Speaker Change: I'll build up we are.

Speaker Change: From the origins of voice AI company, and so kayvon in particular, but the founding team and all the engineers.

Speaker Change: Grew with the company have built an amazing engine in the platform that we're now able to scale across multiple vertical. So we are a platform technology company.

Speaker Change: And then ultimately it comes down to where do we want a practice where is the biggest use case some benefit to our customer. So we knew early on automotive there is real benefits to being able to communicate with your car, while driving for safety reasons, and so forth and there was investment from the Oems to try to scale into that as Kevin mentioned, we went into customer service, we started with restaurant.

Speaker Change: And that one made a ton of sense, because our technology differentiates based on how good. It is how accurate it is and when you order food you don't want just any old pizza, you want the pepperoni and sausage.

Speaker Change: Specifically and that's what our technology and our product does really well at so it made a lot of sense to focus on that as we expanded into enterprise verticals and brought some of our.

Speaker Change: Sure.

Speaker Change: These new capabilities with these acquisitions, we see a lot of runway and I mentioned this I think after the acquisition. It's not like we were we had a lot of runway with restaurants, I think I mentioned the scale of opportunity in the prepared remarks.

Speaker Change: We werent, maybe necessarily rushing to jump into the other verticals, but the opportunity with a really unique asset and a great time.

Good sense for us and I think really where the investment point is then Scott to your question is from a platform standpoint, I think the product is really good place now we can continue to invest in integration capabilities and we're doing that all the time and as I mentioned in response to Mike's question is we can take real production data and automate we can improve the software capability. So.

Speaker Change: There is a bit of investment in product enhancement feature set that will continue to do the real investment then becomes a go to market and in go to market.

Speaker Change: When there is revenue opportunity in a market opportunity you want to go after it obviously you need to make sure the metrics make a lot of sense in a high ROI matter. We look at a lot of metrics LTV to CAC or just generally what is what is our ability to scale. How do we want to go to market and we look at that through multiple dimensions also where do we want to do it in terms of hiring direct sales reps.

Speaker Change: Where can we use channel partners to grow and one of the ways, especially in the enterprise side that we're seeing benefit using indirect channel and channel partners.

Speaker Change: There is aligned incentives theres aligned motivations and that will allow us in sort of a.

Speaker Change: Investment lighter standpoint to go and capture the market so.

Speaker Change: We believe Theres a lot of opportunity to go. After these markets. There is real demand I think there is demand for our solutions when we were.

Speaker Change: King into Amelia one of the big questions for US was the cross synergy opportunity across product sets and we heard pretty resoundingly from the enterprise customers that that the capability on voice was a really interesting one where there was a lot of strategic interest and what we've done we did this with sync three acquisition. We've done we're doing it with the Emilia acquisition.

Speaker Change: How do we sort of displace third party voice engines with our own first of all we know that product very well so.

Speaker Change: We know, it's differentiated and better than the competition. So we want to put that out in front for the customer to benefit from.

Speaker Change: But there's also a cost.

Speaker Change: Cost benefit and then as I mentioned, the long term benefit to product development as we built it on our own solution. So I guess long winded way of saying the priorities or just what is it going to drive the highest outsized returns for us and we look at it from penetrating voice more deeply into the ecosystem, bringing together in this three pillar architecture.

Speaker Change: And use cases like driving grabbing coffee, a new way to work or watching football on a Sunday and getting a pizza like these things are interactions that fit very well with our our strategy and that's what we're trying to drive in terms of conversational intelligence out into the market.

Speaker Change: Great I appreciate all that and then I wanted to follow up on the earlier question about <unk>.

Speaker Change: Cross selling and up selling it sounds like you're already starting to see some momentum there I'm curious where is the sweet spot is that <unk>.

Speaker Change: Nine months out.

18 months out I mean, what does that look like I guess so.

Speaker Change: Ramp where the cadence of how that's executed.

Speaker Change: It really depends I wish I wish I could give you a precise answer but we're already.

Speaker Change: I know of.

Speaker Change: A few really really interesting ones that can be very meaningful to us and I just not far enough along for me to give you a sharp timeline, but there are people who are.

Speaker Change: Some other players out there in a renewal period, that's coming up this year and we want to pounce on that opportunity and say we can take.

Get a competitive win so there are there are deals in motion as we speak.

Speaker Change: Either we got to wait for sort of a renewal.

Speaker Change: Online or in some cases is there a way to kind of breakthrough.

Speaker Change: I see I see near term opportunities, but certainly as you get into the six to nine months and into next year. We think there is a lot of opportunity as part of the upsell is also integrating product stacks.

Speaker Change: We have a smart answering solution, we're really excited about it and it's an advanced.

Speaker Change: Answering capability, that's rolling out we mentioned it in like fitness centers around the U S and it's a it's a solution that helps with up selling membership and so forth then Amelia had a similar product and now, bringing bringing those kind of together and integrating and allowing us to scale across enterprise and into some of the retail that we were already going after.

Speaker Change: There's a lot of things to go after and theirs.

Speaker Change: So I hesitate to put a timeline on it I can just tell you we're aggressively going after it and maybe one last one is architectural things that we're still pretty early in the integration plan things have been going well, but just to make things work on the ground, sometimes it's really getting aligned comp plans and making sure that people are incentive properly I will tell.

Speaker Change: Generically, we really want to move fast on capturing customer opportunities. So if we marginally err on the side of double paying here there between two groups like thats. Okay. In the near term, we obviously need to normalize that over the medium term.

Speaker Change: But really for us it's about capturing scale, that's what we've been focused on for.

Speaker Change: <unk>.

Speaker Change: With just in recent past and will continue to.

Speaker Change: Going forward.

Speaker Change: Perfect I appreciate all the added detail and thanks for taking my questions guys.

Speaker Change: Thank you as a reminder, ladies and gentlemen that star one to ask a question. Please.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Glenn Madison with Ladenburg. Your line is open.

Glenn Madison: Hi, yes, thanks for taking the question cable I'm curious you mentioned military a couple of times.

Speaker Change: Maybe.

Speaker Change: I'm wondering if you could expand if youre able to.

Speaker Change: What youre doing there and just between the military and as large energy deal.

Speaker Change: Just curious how that kind of these new vertical fall into the sales funnel or do you have guys out there.

Speaker Change: Looking at it.

Speaker Change: New verticals.

Speaker Change: <unk> historically been the sweet spot.

Speaker Change: Yes, so it's similar to the core conversational AI and voice enabled in the world and there are a lot of opportunities for us.

Speaker Change: Making.

Speaker Change: Safer and more efficient.

Speaker Change: And so the one we announced.

Speaker Change: Partner.

Speaker Change: That helps us bring our solution to the government and military.

Speaker Change: Along the same lines.

Speaker Change: The partnership with a company called <unk>.

Speaker Change: That.

Speaker Change: We'll bring voice AI too.

Speaker Change: Police cars.

Speaker Change: Cardtronics and so on.

Speaker Change: And.

Speaker Change: Yes.

Speaker Change: I can tell you also that.

Speaker Change:

Speaker Change:

We benefit when the economy is good people want to invest in AI innovation and that brings them to us.

Speaker Change: And then when the economy is challenging people want to invest in automation and cost savings that also brings them to us.

Speaker Change: So you will see both types of deals I mean, there are transactional deal for in restaurant.

Speaker Change: Generate new lease increased revenue will be up so.

Speaker Change: There was some cost saving also.

Speaker Change: But there are.

Speaker Change: Let me automate calls and interactions that are very routine.

Speaker Change: The cost savings element.

Speaker Change: Alright, Thanks, Kayvon I'm, just curious just with the guidance and the.

Just curious I know, there's a lot more SaaS than it used to be.

Speaker Change: There used to be some lumpiness a couple years back and when you get a large.

Speaker Change: Kind of on Prem auto deal.

Speaker Change: Gone away is that still something we should think about and just kind of.

Speaker Change: Overall your.

Speaker Change: Out of the business.

Speaker Change: Has shifted quite dramatically with the addition of a $1 billion as other things just the.

Speaker Change: Your ability to how confident you feel about the general ability to forecast and all that.

Speaker Change: Yeah, with the greater mix of SaaS and it certainly helps with predictability.

Speaker Change: With respect to sort of historical deals.

Speaker Change: We.

Speaker Change: They're still out there I should say like we can.

Speaker Change: Sometimes in customer conversations when we're deploying particularly our edge product.

Speaker Change: <unk> launched.

Speaker Change: And we want commitments, because if we're going to invest in a product like we want to make sure that the volume is there to provide a sufficient return.

Speaker Change: And then for a commitment sometimes the customer wants to negotiate a clearly on price like those are discussions that are ongoing all the time, so the benefit of having a more diversified revenue base as we have a lot more leverage in discussions and we can kind of go well here is sort of our clearing price and if if it doesn't meet the threshold then we're willing to.

Speaker Change: Either pause or just say, let's move on to some other type of discussion.

Speaker Change: But I do think general mix is certainly much more of a SaaS and recurring.

Speaker Change: I mentioned with the acquisition there are different pieces of what we got with the Mueller business Theres a professional services business.

That is really important for us in terms of activating implementation and customization, depending on the customer environment the scale and complexity on those deals can be different so that can create a little bit of noise quarter to quarter.

Speaker Change: We'd love to do is obviously take standard implementation package your customers <unk> package, and then make it much more efficient going forward. So we can be faster to scale.

Speaker Change: There is also escalation support which generally can be recurring but were looking at those contracts in great detail and go on exactly which one makes sense for us over the long term. So that's the other sort of element to the integration that we're actively looking at.

Speaker Change: And then quite openly with a lot of our businesses and the new customers. We're going after there are certain customers, who actually prefer larger capital intensive customers, sometimes want licensing deals and that can create a bit of lumpiness in our results, but that's an okay thing I mean, we're really if I were to <unk>.

Speaker Change: Compared to where we were a year ago.

Speaker Change: I think first the diversity of our.

Speaker Change: Revenue base allows us to be much more Judy.

Speaker Change: Judicious with choices, we make on deals and not.

Speaker Change: Not compromising on price for example in delivering our solution to make sure we're getting full value for those at the same time.

Speaker Change: We want to go capture new markets, and where there is a specific threshold or type of revenue contract that a customer wants if theres real value to us we don't want to fall on principal and say well, we only do SaaS deal. So sometimes the licensing contracts makes sense as well so the licensing contract element I guess I'm going to your point. Unlike lumpiness those things can be lumpy.

Glenn Madison: Lumpier than SaaS, certainly so theres a lot of different pieces to that puzzle, but net net I think to your question Glenn as we do have great line of sight, we have a strong backlog and we have a strong pipeline and we still think there is a lot more runway certainly going into the future years that we want to capture in terms of the massive Tam.

Speaker Change: That we're going after so.

Speaker Change: Hopefully that gives you a little bit of flavor of what were great.

Speaker Change: Great very helpful. Thanks, very much.

Glenn Madison: Thank you thanks Glenn.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Leo Carpio with Joseph Gunnar Your line is open.

Leo Carpio: Good afternoon, gentlemen, I've got two questions. The first question is regarding your platform. When you look at the platform are there any missing technologies or.

Leo Carpio: Our systems do you think you still need actually need to go and acquire and then secondly on the auto POC contracts how quickly can those plc's move from.

Leo Carpio: Testing to full contracts AD revenue could it be like a 12 to 18 months horizon. Thank you.

Leo Carpio: Yes.

Leo Carpio: On your first question.

Leo Carpio: We try to be a complete one stop shop for our customers and provide them everything they need.

In the majority of those cases those technologies are built in house over the last 20 years and we are very proud to outperform a lot of our competitors for example, I mentioned our latest Polaris.

Leo Carpio: This is a model.

Leo Carpio: Google by more than 20%.

Leo Carpio: And others.

Leo Carpio: But were also not shy about partnerships.

For example.

Leo Carpio: If a partner has a better text to speech that sounds better than some of our customers prefer that we give them that choice.

Leo Carpio: This one text to speech, but it also be partnerships that allow us to offer third party, Texas, Texas piece to our customers.

Speaker Change: I think as a source of strength for us downtown to not be shy about partnerships. In addition to building in house.

Speaker Change: So ultimately if our customers they've worked with us sometimes we source the technology from third parties, but ultimately they get it all from us.

Speaker Change: And then what was your second question I'm sorry.

Speaker Change: But if you are seeing.

Speaker Change: Yes, the POC.

Speaker Change: If they are already live with us in production.

Speaker Change: And in most cases, it's just a flip a switch so we.

Speaker Change: Pick a number of.

Speaker Change: Based on there.

Speaker Change: Unique Ids and we enable that you'd be sure in dose.

Speaker Change: And we can do that very quickly if you can run the pilots and.

Speaker Change: Do the audits and get the results and then.

Speaker Change: To go live with more units.

Speaker Change: So that's how it worked together to be brought generative AI and large language models in.

Speaker Change: Psoriasis vehicles in Europe last year.

It's a new OEM that is not using our voice assistance by default.

Speaker Change: It would have to be.

Speaker Change: It is a longer process.

Speaker Change: But that's also the incredible power of our third pillar. It is bringing a lot more Oems to us to choose us for their default assistance going forward because of the monetization opportunity.

Speaker Change: Alright, thank you.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, I'm showing no further questions in the queue.

Speaker Change: That concludes today's conference call. Thank you for your participation you may now disconnect.

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Speaker Change: Hello, and welcome to <unk> fourth quarter 2024 earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

To ask a question during the session you will need to press star one on your telephone.

Dan: Dan here automated missed advising your hand is raised to withdraw your.

Speaker Change: A question. Please press star one again.

Scott Smith: I would now like to turn the conference over to Scott Smith, Sir you may begin.

Scott Smith: Good afternoon, and thank you for joining our fourth quarter 2024 conference call.

Speaker Change: With me today is our CEO, Kevin <unk>, and our CFO and the test Sharon.

Scott Smith: We will begin with some short remarks before moving to Q&A.

Scott Smith: We'd also like to remind everyone that we will be making forward looking statements on this call.

Scott Smith: Actual results could differ materially from those suggested by our forward looking statements.

Scott Smith: Please refer to our filings with the SEC for a detailed discussion of the risks and uncertainties that could affect our business and for discussion statements that qualify as forward looking statements.

Scott Smith: In addition, we may discuss certain non-GAAP measures.

Scott Smith: Please refer to today's press release for more detailed financial results and further details on the definitions limitations and uses of those measures and reconciliations from GAAP to non-GAAP also note that the forward looking statements on this call are based on information available to us as of today's date.

Scott Smith: We undertake no obligation to update any forward looking statements, except as required by law.

Scott Smith: Finally, this call is being audio webcast in its entirety on our Investor Relations website.

Scott Smith: An audio replay will be available following today's call.

Scott Smith: With that I'd like to turn the call over to our CEO Kevin Mosher. Please go ahead Kevin.

Kevin Mosher: Thank you Scott and thank you to everyone for joining the call today.

Kevin Mosher: We had our strongest quarter on record with $35 million in revenue, representing an increase of over 100% year over year.

Kevin Mosher: With that we reached the top end of our revenue guidance range for the full year, which we raised just last quarter.

Kevin Mosher: This speaks to the continued acceleration of our business in fact in the last five years, we have grown our topline at a compound annual growth rate of more than 50%.

Kevin Mosher: And since going public less than three years ago, we have achieved significant growth in numerous key metrics.

Kevin Mosher: Revenue increased by eight times Coors increased by seven times and bookings increased by five times.

Kevin Mosher: But the success, we are achieving today didn't start three years ago. It began 20 years ago with a vision that is now becoming a reality.

Kevin Mosher: We made bold predictions early on and stayed committed to the path we envisioned with <unk>.

Kevin Mosher: Built an enterprise grade platform that power some of the world's largest organizations.

Kevin Mosher: This laid the foundation for us to capitalize on the fast growing voice AI market.

Kevin Mosher: Our ability to innovate at a rapid pace and maintain the agility of our pure play high growth. This structure allows us to deliver cutting edge solutions with speed accuracy and reliability.

Kevin Mosher: We are incredibly excited that we recently unveiled the third pillar of our business our voice commerce ecosystem.

Kevin Mosher: Somehow has pioneered distribution for years and the concept is simple yet powerful.

Kevin Mosher: The users are products powered by our voice assistant our pillar one can transact with businesses that are powered by our AI customer service offerings, our pillar two.

Kevin Mosher: This forms the foundation of Fanhouse, three pillar business strategy, and we expect it will increase our momentum further.

Kevin Mosher: At CES, we demonstrated the complete end to end experience of a driver discovering food options and placing an order have you have there in vehicle voice assistant using natural speech.

Kevin Mosher: This ecosystem creates value for all stakeholders.

Kevin Mosher: For the end user it enhances convenience and safety for.

Kevin Mosher: For merchants it delivers new leads and it creates a monetize or a moment for sound Hound with revenue sharing opportunities for the Oems.

Kevin Mosher: The traction we received could not have been better within just a few weeks two notable Japanese automakers are pursuing poc's.

Two German automakers are pursuing poc's.

Kevin Mosher: Several other notable Oems in the U S and Korea are pursuing POC.

Kevin Mosher: And multiple national chain restaurants are eager to be participating merchants, which will add to our existing portfolio of prominent brands.

Kevin Mosher: We expect this concept to create a flywheel effect for sound out with more Oems and device makers adapting our voice assistant and more businesses adopting our AI customer service.

Kevin Mosher: Let me share more highlights on business wins.

Kevin Mosher: In automotive our pipeline has never been this strong we are in more and more rfps and poc's with new logos, including some of the largest automotive brands in the world. We have one for EV brands, including Lucy and talk.

Kevin Mosher: And our existing customers are upgrading to Santa chat AI automotive regenerative AI for additional royalties per unit.

Kevin Mosher: In healthcare, we had a very strong quarter landing four notable wins, including Duke health Englewood health and wealth of our health system.

Kevin Mosher: We are especially excited it seems we are seeing strong repeatable business in this industry.

Kevin Mosher: In restaurants Burger King one of the largest <unk> in the World went live in the UK.

Kevin Mosher: We also saw expansion and wins with water breaker peet's coffee torches tacos churches, Texas chicken among others.

Kevin Mosher: We continue our expansion in four out of the top five pizza brands.

Kevin Mosher: We believe the pace of adoption of AI customer service in restaurants is increasing.

Kevin Mosher: Samsung already being the largest provider with dozens of prominent brands and well over 10000 locations.

Kevin Mosher: And government and military we signed a contract with the city of Coral Springs, and continue to rollout our conversational AI capabilities with federal government agencies, such as a branch of the U S military together with general dynamics.

Kevin Mosher: In retail we are expanding our reach across multi location retail brands and clothing fitness vehicle maintenance home services waste management and more.

Kevin Mosher: Some of our customers include tour at multiple planet fitness franchise groups and my gym among others.

Kevin Mosher: Our largest deal in Q4 wasn't energy, we were happy to add a new industry to our portfolio this quarter and signed with one of the largest electric utilities in the United States.

Kevin Mosher: We also recently announced a partnership with <unk> a leader in state of the art roadway intelligence technology to develop a first of its kind audio visual AI to bring hands free voice control to emergency vehicle technology.

Kevin Mosher: Moving to Agentic AI.

Kevin Mosher: <unk> is a leader in enterprise conversational AI.

Kevin Mosher: And our scale as a pure play AI software company positions us at the forefront of the agent take AI Revolution.

Kevin Mosher: With our proven conversational AI platform deep AI expertise and AI driven customer service solutions already embedded into hundreds of enterprise brands across industries. We are uniquely equipped to drive. This next wave of innovation and capture this growing market opportunity.

Kevin Mosher: Agentic AI is widely discussed, but many are still defining what it means and how it could be applied.

Kevin Mosher: At its core <unk> is a network of autonomous agents working together to achieve complex goals and execute actions.

Kevin Mosher: Each agent operate independently they make decisions execute tasks and collaborate to optimize performance.

Kevin Mosher: When a user sets a goal the system intelligently identifies the necessary steps orchestrates them in sequence and applies reasoning to deliver the best outcome.

Kevin Mosher: This shift allows businesses to focus on defining objectives, while AI handlers execution, unlocking new capabilities and efficiencies.

Kevin Mosher: We believe the world is transforming from an ecosystem of Apis to an ecosystem up agents.

Kevin Mosher: <unk> AI introduces a new dimension to our platform expanding its capabilities and impact it is an inevitable evolution in AI functionality for our customers.

Kevin Mosher: Evolution comes as AI adoption moves from experimentation to necessity.

Kevin Mosher: Businesses are rapidly embracing AI and as they do.

Kevin Mosher: <unk> is in a position of strength.

Kevin Mosher: We have seen exciting results in the agent AI tools, we've created and are building and testing Agentic use cases in every major vertical.

Kevin Mosher: We will bring these to commercial deployment soon and this will be a game changer for our customers and the industry more to come in the near future.

Kevin Mosher: I'm also pleased to share that <unk> had a strong presence at CES, where we showcased groundbreaking technologies and AI solutions in our first ever booth at the show there.

The buzz around our booth was electric with nonstop traffic from industry leaders and innovators in years to come and demo our latest advancements.

Kevin Mosher: In addition to unveiling the first ever in vehicles voice commerce ecosystem. Our CES participation also feature collaborations with Nvidia Perplexity Doucet Motors, LG and a broad range of restaurant partners. These.

Kevin Mosher: These partnerships highlights our leadership in delivering innovative voice solutions that are transforming customer experiences across industries.

Kevin Mosher: In addition, 500 were featured in Nvidia partner passport program at CES.

Kevin Mosher: Across these event select partners were chosen to present their innovative work with Nvidia and we were honored to demonstrate our voice AI work with them.

Kevin Mosher: This collaboration continues with our upcoming participation at Nvidia GTC to design them 25, there will be showcasing demos of our voice assistant leveraging generative AI on the edge with Nvidia drive Ags as well as our voice commerce ecosystem.

Kevin Mosher: We look forward to bringing more exciting updates and demos to GTC this year.

Kevin Mosher: Previously I have talked about opportunities with Polaris, our multimodal multilingual Foundation model.

Kevin Mosher: Let me share some of the impressive results of this groundbreaking technology.

Kevin Mosher: We compare ourselves against all the major players and prominent benchmarks, both public and private.

Kevin Mosher: We do this in different real world settings high noise environment and in settings, where speed and low latency are critical.

Kevin Mosher: We know that humans don't speak uniformity, so we consider accent and background disruptions.

Kevin Mosher: The results have been amazing.

Kevin Mosher: Against Google for example, we outperformed by north of 20% better accuracy.

Kevin Mosher: We also beat them on speed with four times better latency.

Kevin Mosher: Against <unk> model, we are 26% to 36% more accurate on various benchmarks.

Kevin Mosher: To do this on models 110th of the size of what the opening of our users.

Kevin Mosher: This is because of our ability to balance the right portions of data science and machine learning.

Kevin Mosher: And we continue to innovate to keep extending our lead.

Kevin Mosher: This is exciting technology and as more customers begin to adopt it the power of our AI only gains more interesting the market positioning us as a leader in innovation and performance.

Kevin Mosher: Our ongoing advancements strengthen our competitive edge driving further interest in accelerating our growth in the market.

Kevin Mosher: In closing it is becoming increasingly clear that the AI revolution be predicted is now here.

Kevin Mosher: We are seeing strong growth our customers love our solutions and our entire ecosystem is expanding rapidly.

Kevin Mosher: Within automotive and pillar, one we continue to add new logos, including with the eds tanks.

Kevin Mosher: Thanks to our innovations such as Samsung chat AI automotive and our newly unveiled both commerce ecosystem, we're seeing massive interest.

Kevin Mosher: In pillar two aircraft customer service, we are gaining momentum with drive thru and phone ordering rollouts for major of two of our brands.

Kevin Mosher: We're excited to have just announced our breakthrough dynamic drive through platform that extends the restaurant ordering experience into calling texting scanning and directly into cars.

Kevin Mosher: Our AI agents are seeing strong adoption across smbs regional chains and enterprise brands.

Kevin Mosher: We brought meaningful depth and breadth to conversational AI capabilities.

Kevin Mosher: Long with a diverse range of verticals.

Kevin Mosher: And with the acceleration of our agent AI capabilities, our customer service offering will continue to see accelerated growth.

Kevin Mosher: We are proud to have introduced our third pillar voice commerce last month, fulfilling our vision of emerging products and customer service into a powerful new product offerings, we have a winning position in all pillars of our business.

Kevin Mosher: As we bring another successful year to a close I want to express my sincere gratitude to all San unemployed for their exceptional achievements and contributions in making this all possible.

Speaker Change: With that I'll now turn the call over to any cash to talk about our financial performance key growth drivers and business outlook.

Speaker Change: Thank you, Kevin and good afternoon, everyone Q.

Speaker Change: Q4 revenue was $34 $5 million, increasing more than 100% year over year.

Speaker Change: For the full year, we grew by 85%, reaching the high end of our guidance range with $85 million in revenue.

Speaker Change: Before we dive into the financials for the quarter I'd like to reflect on 2024 and what we accomplished.

Speaker Change: Within the most dynamic and fastest growing market in tech we continue to execute our game plan added to our portfolio of solutions and innovated with distinction and one of the most significant technological shifts in over a decade and quite possibly in our lifetime.

Speaker Change: 2024 was a breakthrough year for <unk> as we diversified our business across products and industries laying the foundation for scalable growth.

Speaker Change: Time for voice AI is now.

Speaker Change: Today, we work with 30% of the top quick service restaurants, and 70% of the top financial institutions in the world.

Speaker Change: We added new automotive customers grew in health care and this quarter, we entered a new high seven figure deal with a large energy customer.

Speaker Change: We have significantly reduced our customer concentration.

Speaker Change: Our largest customer represented slightly more than 14% of revenue in 2024 versus comprising nearly half in 2023.

Speaker Change: We have transformed our business towards more predictable recurring revenue streams and have positioned ourselves for sustainable growth in 2025 and beyond.

Speaker Change: We continue to innovate with high velocity further reinforcing our leadership in voice AI the.

Speaker Change: The balance sheet is strong we have capital flexibility to do the right things and our vision is now being realized.

We finished the year with cumulative subscriptions and bookings backlog of nearly $1 2 billion.

Speaker Change: Up over 75% year over year.

Speaker Change: Mentioned before this metric is a measure of customer activity and gives current value to our existing contracts.

Speaker Change: The measure is based on contracts signed and gives a snapshot of the revenue we expect to realize over the coming several years.

Speaker Change: In and of itself, though.

Speaker Change: It is an incomplete measure as we have been noting new deals each quarter as well as significant cross sell and up sell opportunities, we're seeing having added new skus and use cases across verticals.

Speaker Change: We have a very diverse product portfolio with a massive addressable market that is growing rapidly.

Speaker Change: We see a number of near term serviceable markets, where we have great product market fit.

Speaker Change: And we are going after these with accelerating momentum.

Speaker Change: Let me give you a few examples.

Speaker Change: In automotive the 90 million plus global light vehicles produced each year gives us billions of dollars of repeatable revenue opportunity.

Speaker Change: We continue to gain share in this space and with <unk> and now voice Commerce, we believe it will only further accelerate.

Speaker Change: And restaurants, there are millions of global food establishments, representing tens of billions of dollars of serviceable market with over 75 billion transactions that can be automated for pickup delivery and drive through orders.

Speaker Change: Just looking at one small, but attractive and rapidly growing slice U S based drive throughs.

Speaker Change: We see roughly $5 billion in annual revenue available.

Speaker Change: We are expanding partnerships and catalyzing scale.

Speaker Change: We are leading the competition.

Speaker Change: In health care retail and energy sectors, there are trillions of interactions occurring annually across customer service scheduling and operational workflows.

Speaker Change: With millions of businesses and consumers relying on these industries daily this creates a massive pool of mission critical recurring revenue streams to enhance efficiency reduce cost and drive engagement at scale.

Speaker Change: <unk> will play a key role here.

Speaker Change: There are several other industries, where we can point 2 billion plus Tam and the fact that we have scalable products strong reference customers and direct and indirect sales motivated to win gives us great confidence in our ability to continue our hyper growth for years to come.

Speaker Change: To summarize our product platform is in the sweet spot of a massive technological shifts happening right now we have a differentiated competitive position in the markets. We are targeting are extremely large and so we are executing with tenacity to capture as much of these opportunities as we can.

Speaker Change: With that let me now discuss the fourth quarter financials in more detail.

Speaker Change: Q4 revenue was $34 5 million up 101% year over year in automotive, we continue to see double digit unit price expansion in the quarter driven by our generative AI solutions and overall product expansion. The automotive unit growth was hampered in Q4 by some of the overall macro pressures facing the industry, but our <unk>.

Speaker Change: <unk> in 2025 are for continued strong growth based on the positive signs we are seeing already this year.

Speaker Change: And we are seeing strong double digit year over year growth in active cloud users, which in effect is our most important measure as it represents our ongoing both committed user base.

Speaker Change: Within customer service, we continue to scale signing meaningful new logos, such as Burger King in the U K and the aforementioned large energy company based in the U S.

Speaker Change: The quarter also benefited from the previously discussed acquisitions as mentioned last quarter, our scale and increased SaaS like revenue enables us to reduce our reliance on certain large point in time deals going forward directly improving price stability, and which will benefit the diversity and predictability of our revenue in future periods.

Speaker Change: Similar to what I noted last quarter, our customer concentration has significantly improved in.

Speaker Change: In the prior year, we had well over 90% of our revenue from just five customers now that ratio is roughly one third.

Speaker Change: In Q4, our GAAP gross margin was 40% down year over year, primarily due to the impact of the business and product mix of recent acquisitions.

Speaker Change: Adjusted for noncash amortization of purchased intangibles and employee stock compensation, our non-GAAP gross margin was 52%.

Speaker Change: GAAP and non-GAAP gross margins were down sequentially due to the inclusion of Amelia for a full quarter compared to only partial quarter in Q3.

Speaker Change: We are executing on the synergies identified from our acquisitions and are already starting to realize some of these efficiencies.

Speaker Change: Additionally, as we automate more workflows, we expect our product mix to drive meaningful improvement.

Speaker Change: And our gross margins ultimately driving us back to the 70% plus levels, we have historically realized.

Speaker Change: Last quarter I mentioned, we would review acquired customer contracts and move away from deals that Didnt meet our long term profit objectives, and we started to prune that portfolio in the quarter. The impacts will be seen over time, and we have more to do there will be revenue impacts, but it will drive healthier margins and a better long term profitable growth profile.

Speaker Change: R&D expenses were $24 million in Q4, reflecting a 60% year over year increase primarily driven by our acquisitions.

Speaker Change: We are committed to innovating our products to stay at the cutting edge of this fast moving market.

Speaker Change: We have developed an architecture capable of arbitrating multiple ela lens, both our internally trained models and knowledge domains as well as third party <unk> to deliver the best possible customer experiences.

Speaker Change: Investing in our key initiative Polaris is a priority and you can see why based on the differentiation against peers that Kevin talked about.

Speaker Change: The massive amount of data we have is another focus area, where we continue to invest we use this data to consistently train our models in various industries, which we see as a key differentiator versus our competition further deepening our mode.

Speaker Change: Sales and marketing expenses were $9 6 million in Q4, reflecting a 114% year over year increase primarily driven by acquisitions. We are investing in growth with increased marketing campaigns and overall brand and demand. Gen. Efforts. This includes targeted investments in the go to market motion of Amelia to attack the tremendous enterprises.

Speaker Change: Opportunity, we see across multiple verticals.

Speaker Change: We are continuing to invest in direct and indirect sales capabilities and customer success to go after new customers incubate existing relationships and ensure we effectively cross sell and up sell across our full portfolio, where we've seen some really promising early signals.

Speaker Change: G&A expenses were $16 4 million in Q4, reflecting a 115% year over year increase primarily driven by our acquisitions on a sequential basis, we were up by 8% mainly due to the Emilia is full quarter impact over the long term, we expect leverage in our G&A line, although we will.

Speaker Change: To invest in system and process improvement to enhance our control environment and modernize our capabilities, including the consolidation and integration of multiple ERP and other systems that have stemmed from our different acquisitions in 2024.

Speaker Change: Our financials also show a charge related to the change in fair value of contingent liabilities significantly impacting our GAAP loss from operations in Q4 by approximately $220 million.

Speaker Change: Let me give you some context here while this is not a new line item. This stems from the acquisitions. We have completed to note. This is a non operating and non cash expense.

Speaker Change: Significant change is due to the required mark to market accounting and reflects the strong increase of our stock price at the end of 2024, this balance will fluctuate from quarter to quarter, sometimes as significantly as it was in Q4 and as such is excluded in our non-GAAP results. We also had noncash.

Speaker Change: Employee stock compensation of $9 9 million in noncash depreciation and amortization, including the amortization of intangibles of $7 9 million in Q4, all of which are included in our GAAP results. Please note that we expect stock based compensation to increase in 2025 with the full impact of the acquired.

Speaker Change: Employee equity awards.

Speaker Change: As a result, adjusted EBITDA was a loss of $16 8 million in Q4.

Speaker Change: The year over year change was driven primarily by strategic acquisitions of which we are still early in our integration efforts and growth investments, we have been making across the business.

Speaker Change: <unk> was $1 $2 million expense for the quarter. This includes interest expense of $1 3 million.

GAAP net loss and EPS were impacted by the change in fair value of contingent liability as mentioned before <unk>.

Speaker Change: non-GAAP net loss was $19 million and non-GAAP net loss per share was <unk> <unk> in the quarter.

Speaker Change: This also adjust for noncash depreciation and amortization M&A transaction costs stock based comp and other noncash items.

Speaker Change: Our cash and equivalents at year end was $198 million we.

Speaker Change: We paid down the remaining outstanding debt from the acquisition in Q4. So we ended 2024 with no debt on the balance sheet.

Speaker Change: Last month, we announced a new S three and at the market equity program to Opportunistically raise capital and to provide flexibility we will be thoughtful about when we execute on the program and as I've said before our capital position is strong and we do not need incremental capital to achieve the breakeven operating profile we expect.

Speaker Change: To deliver this year.

Speaker Change: With that let me discuss our financial outlook.

Speaker Change: We are starting 2025 with momentum.

We have a strong pipeline and are scaling across our product and business areas, we are adding new capabilities and delivering for our existing customer base.

Speaker Change: Our customer demand continues to grow and our pace and capturing that demand at scale is accelerating.

Speaker Change: And our visibility into the near term opportunities is improving.

Speaker Change: So even though it is early in the year for 2025, we feel confident increasing our revenue outlook to 157% to $177 million.

Speaker Change: There will be a ramp in revenue through the year, given the nature of our customer base underlying seasonality unexpected large deal timing in prior years, we delivered roughly 30% of our annual revenue in the first half we.

Speaker Change: We think we will deliver closer to 40% in the first half of this year. So the quarterly mix will continue to be backend loaded, but less so than in prior years as our mix of recurring subscription business has increased.

Speaker Change: Overall this outlook affirms our expectation of another year of very strong growth.

Speaker Change: We also remain committed to our path to profitability.

We will get there through continued scale and through surgical high ROI investments.

Speaker Change: We will also continue to drive the acquisition cost synergies and build on the positive early integration progress we have seen occur.

Speaker Change: Accordingly, we continue to expect to achieve adjusted EBITDA profitability by the end of 2025.

Speaker Change: In closing 2024 was a catalyzing year for us in many ways and our business is much stronger as a result.

Speaker Change: We enter 2025 would tailwind within a market that is ripe for our AI solutions.

Speaker Change: In this new Gen AI LLM World, We believe natural language conversations are the next major transformation and how humans will interact with technology and voice AI is the killer App.

Speaker Change: Voice AI is what we do we have pioneered and innovated in this space since our origins.

Speaker Change: As we look forward, we will continue to bring new groundbreaking offerings to our customers to help them excel in this new technology era.

Speaker Change: Thank you and now we will move to Q&A.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please stand by while we compile the Q&A roster.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Our first question comes from the line of Gil Luria with D. A Davidson your line is open.

Gil Luria: Yes. Thank you good afternoon.

Gil Luria: There's been some pretty big breakthroughs recently in the efficiency of our.

Gil Luria: AI models.

Gil Luria: And there are those models are open source.

Gil Luria: Getting a lot smaller.

Gil Luria: I know you you develop your own model you use other models as well.

Gil Luria: Does the does the advances in this technology make it possible for you.

Gil Luria: <unk> in the restaurant drive through business too.

Gil Luria: Put more of the intelligence on the device.

Gil Luria: And therefore, maybe reduce latency make it more efficient and improve the performance is this something where you can leverage the recent advances.

Gil Luria: Absolutely in fact, we predict that this two years ago when we.

Gil Luria: Created our architecture to use llm's to bring out a lens into our conversational AI, we predicted that the models, we've become better and cheaper and there will be multiple models that will be good at different things some of them will be made by <unk>.

Gil Luria: And third party content, we would be open source. So we created the architecture in the way that we can benefit from it as these advances.

Gil Luria: Our realized.

Gil Luria: So those are absolutely good for us.

Gil Luria: Yes.

Gil Luria: The most immediate impact is that our platform becomes more accurate and the running cost goes down.

Gil Luria: Got it.

Gil Luria: Our reliance on third party API, we bring those in house, including our own models or the open source, one that'd be fine tune.

Gil Luria: But as you said also we can bring them to the edge, we had a great demo at CES.

Gil Luria: Showing the entire.

Speaker Change: Lars language my victory insensitive AI without cloud connection.

Speaker Change: Yes, Lucky was very depressed.

Speaker Change: Sorry, I wasn't able to make it.

Speaker Change: Natascha for you that that backlog number has grown quite a bit can you give us a couple more parameters around it what's the duration of that backlog number may be.

Speaker Change: By vertical or by pillar what are the different pieces in that I think you said $1 2 billion.

Speaker Change: Sure.

Speaker Change: Duration is pretty consistent with prior quarters about six years and I think it's slightly north of six years.

Speaker Change: By vertical I'll say continue to have a good balance.

Speaker Change: If you go back.

Speaker Change: Year, and a half ago. It was heavy in the automotive automotive continues to penetrate and grow very excited coming out of CES and what we announced with voice commerce that we're getting great traction with our.

Speaker Change: A lot of deals gave I mentioned some of those in the prepared remarks, where we've seen the outpaced growth now for several quarters running has been in the restaurant space and.

Speaker Change: For us that.

Speaker Change: The deals that we're signing continued to grow its really continues to be about pace and scale and how we can ramp with them and now with Amelia and the mix and I mentioned, some new customers in new industries at.

Speaker Change: We're really excited about but across predominantly healthcare financial services, there is a real strength.

Speaker Change: Had the new deal with the entered in the energy sector that we're excited about we think there's a long runway that we can capitalize on there. So what's wonderful about that metric call. It this year as compared to when maybe we were talking about it last year is twofold number one.

The diversity point across industries voice AI is agnostic it can influence and benefit many different types of customers.

Speaker Change: The strength of it and then just the shift I mentioned in the prepared remarks around more recurring revenue basis in that metric. That's definitely that composition is grow and you see that a bit with our mix towards more pillar two revenue.

Speaker Change: So I think all of that portends, just continued strength in our possibilities and I also mentioned on the call that that's just the starting point for US we continue to aggressively go after Neil new deals that are not reflected in that metric. We are now having particularly post some of these acquisitions cross sell and upsell opportunities are really exciting early data.

Speaker Change: Is on the.

Speaker Change: Our restaurant customers really leaning into some of the solutions that we got in the conversational AI with the Emilia acquisition or some of the Emilia customer base now leveraging some of our smart answering capabilities that we built up on the <unk> side. So really we can incubate a lot more with that existing customer base and certainly are continuing to grow and add more.

Speaker Change: Sure.

Speaker Change: Got it thank you very much.

Speaker Change: Thanks, guys. Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Thomas Blakey with Cantor Your line is open.

Thomas Blakey: Hey, guys. Thanks for taking my questions here.

Thomas Blakey: It's great to hear about all of those <unk> off of CES and probably even work you've done prior to that could we maybe.

Thomas Blakey: There and just talk about what the typical time to revenue is four four a POC.

Thomas Blakey: A follow up.

Speaker Change: I'll start and if this might add.

Thomas Blakey: So.

Thomas Blakey: Automotive we can go we can ramp you'll see us very quickly, especially with the ones that we are live in the market for example last year over year on several Poc's Atlantis.

Thomas Blakey: Bringing Joseph AI and <unk> into the cars.

Thomas Blakey: And the result was incredible and they decided to actually go.

Thomas Blakey: Live with other units.

Thomas Blakey: With the AI that brings very deep AI into it so.

Thomas Blakey: At this time, we actually have a lot of new Oems as I mentioned to Japanese Oems and two German OEM server Oems from U S and Korea are going throughout the year.

Thomas Blakey: So the timing.

Thomas Blakey: Great Jonathan in the first half of this year for most of those.

Thomas Blakey: That would be charged for <unk>, but.

Thomas Blakey: The vision is still a big in this case that.

Thomas Blakey: We want to prove it as quickly as possible.

Thomas Blakey: <unk>.

Thomas Blakey: And you.

Thomas Blakey: You asked about revenue impact.

Thomas Blakey: We actually don't have.

Thomas Blakey:

Thomas Blakey: The third pillar monetization revenue is not as an upside this year.

Thomas Blakey: The impact of the three pillar vision is already being realized because.

Thomas Blakey: Our pillar one pillar two customers are more eager to adopt our platform because they see that path to monetize at all moments from the third pillar.

Speaker Change: Yes, maybe Tom if I will just add I'm not sure. If your question was specific to the PSA. So we're talking about coming out of CES, but maybe if it's okay. I'll just expand your question more broadly how we see it.

Speaker Change: Ramping of customer base that are slightly different depending on the industry and product vertical so within the automotive sector. Traditionally if we get into a deal and we tried to rollout and we've got royalties on cars as they're shifting we get the royalty so as we get more units out in market. That's what we that's where we generate revenue that has historically been in the model with restaurants, I think I've mentioned in prior.

Speaker Change: Called how.

Speaker Change: Really it depends on the customer one where there is drive thru, sometimes you have hardware requirements and we have to go through the process of making sure the drive through there.

Speaker Change: The proper microphones headset display boards and we've done a lot of innovation to really help our restaurant customers scale. There for example, we've innovated with like smaller footprint.

Speaker Change: Post with the display board that doesn't have the same permitting requirements and that allows us to go faster. So there's a lot of experimentation in trial and working with great partners.

Speaker Change: On the hardware side to provide that scale on the phone ordering for restaurants, it's a little bit more of you can go much faster.

Speaker Change: Great with the point of sales and we can we can scale. It technologically very quickly sometimes the gate and restaurants could be the.

Speaker Change: Corporate sort of do they have franchise franchisee that we need to have multiple conversations with this corporate own all of the locations or it is corporate have greater influence. So those are some of the gating factors and then when we get into the enterprise business, where we're selling and interactions and.

Speaker Change: We can deploy the product pretty quickly we have a professional services organization that specializes in getting product ramped up and then really again kind of depends on the scale and interactions.

Speaker Change: As we can get more and more use cases, we can move from customer facing two internal employee facing thats ways, where we scaled.

Speaker Change: The interaction based upon which we generate recurring revenue. So so that if you're trying to expand your question to something more.

Speaker Change: Broad, but theres different dimensions to all of the verticals.

Speaker Change: Yes, no that was a great review and I appreciate that more than more than you know and yes. I was asking you gave out a lot about the poc's from the pillar three and it was great to see the flywheel emotion already impacting pillar one be exciting to see what that unit ramp look like in pillar one in the coming year.

Speaker Change: If you have a follow up.

Speaker Change: The seven figure deal in.

Speaker Change: In the energy vertical it sounds like you really exciting in terms of expanding into new verticals like this first of all from a administrative perspective, maybe.

Speaker Change: Any kind of like what's the economic impact in the current quarter or the early 'twenty five that would be helpful and what does this portend came on for.

Speaker Change: It sounds sounds bringing to outside of the core auto restaurant.

Speaker Change: And serve and health care verticals that would be helpful. Thank you very much.

Speaker Change: Sure I'll hit the first part so it's a multiyear deal what is great is the.

Speaker Change: The scale is really much larger than our traditional deal so.

Speaker Change: Terms of interactions and the capabilities that we're bringing in.

Speaker Change: It is the type of customer that pays early so that's great. We've got actually there is from an economic from a cash perspective, there is accelerated cash collection. So that's a strength for us, but generally speaking yes.

Speaker Change: Bigger point of the enterprise business has given us great penetration into financial services, where we talked about being in seven of the top 10.

Speaker Change: Institutions and then in healthcare, we're really got a large runway and we're investing because we see a lot of opportunity and you can just imagine in People's personal interactions you got to set an appointment sometimes you've got to get some results you need to have a conversation with a nurse or a doctor like all these interactions are very complicated through the traditional models and thats what were monitored that modernizing making easier for people.

Speaker Change: And now in energy, whether you need to check as your power upper all of these types of things. They use cases are tremendous and our platform scale scales very well. So we're excited then.

Again, a multiyear deal. So we think we can benefit from that relationship over the long term and hope to expand even further.

Speaker Change: Yes, so very repeatable.

Speaker Change: Offering so we can go to other similar companies.

Speaker Change: Companies and offer them.

Speaker Change: More efficient way.

Speaker Change: And I'm.

Speaker Change: We're very proud and excited.

Speaker Change: Expanding beyond restaurants, when we started our AI customer service.

Speaker Change: Initiatives.

Speaker Change: A number of years ago, we started with restaurants versus restaurants to us.

Speaker Change: Express and Amazon bookstores, and how they sell everything let's start with restaurants do with really route and then expand to other verticals and now we are well beyond restaurants BRAF mutation.

Speaker Change: Financial services government government military and retail and we've just added energy.

Speaker Change: Again, all of those are repeatable and getting faster adoption is getting faster.

Speaker Change: Great to see the successes. Thank you for answering my questions.

Tom: Thank you Tom.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Mike Latimore with Northland Capital markets. Your line is open.

Mike Latimore: Yeah, great. Thank you.

Speaker Change: On Amelia.

Speaker Change: They have both kind of customer engagement and then more internal.

Speaker Change: Support use cases are either one of those sort of more pronounced in the pipeline.

Speaker Change: Yeah.

Speaker Change: The customer service is more pronounced.

Speaker Change: But.

Speaker Change: And that also is more aligned with tenants.

Speaker Change: Our core technology and history.

Speaker Change: But the idea of automation, it's also very strategic because a lot of those customers.

Speaker Change: Can be customers.

Speaker Change: Bulk.

Speaker Change: And we can package and upsell them and give them incentives to adapt both of them.

Speaker Change: And Theres, probably just to give you a couple of dimensions. One is they have the customer facing they also have employee facing internal to enterprises. That's an opportunity that it's also there and then certainly the TSM.

Speaker Change: So all of those are there. They also mentioned previously the.

Speaker Change: The mix, obviously, we're investing in we valued these SaaS like software.

Speaker Change: <unk> profile that they had but they also have professional services that for us allows us to scale into enterprises and customized implement.

Speaker Change: And then they also have escalation support which for US is the area I mentioned in the prepared remarks, where we're looking at making sure. We are in all of those contracts makes sense on a long term profitability standpoint, but what is wonderful with that and what we value tremendously is the data and we get real time production data that we can leverage improve our models and then automate and scale that over time.

Speaker Change: Got it.

Speaker Change: And then just on the <unk>.

Speaker Change: [noise] pricing you're contracting model is at most kind of your under that SaaS model, where you get a <unk>.

Speaker Change: Annual subscription or is there an element that's kind of usage based.

Speaker Change: Yes, it's been a mix, but definitely interactions and there is different depending on the vertical and depending on the customer there is either interaction based sometimes its containment based on success based I mean generally speaking, obviously, we're creating AI outcomes to try to help deliver value for the customer in a lot of times the customers looking for hey, I'll pay more.

Speaker Change: More for something that successfully contained.

Speaker Change: Our query so it is it is generally moving towards that SaaS like subscription models, but they're sort of up until a certain volume.

There is a certain number of interactions that are included and then above that there is increased pricing.

Speaker Change: Yeah, Okay. Thank you.

Mike Latimore: Thank you Mike.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Scott Buck with H C. Wainwright and company. Your line is open.

Scott Buck: Hey, good afternoon, guys. Thanks for taking my questions.

Speaker Change: The first one when I think about the <unk>.

Dairy verticals, whether it's.

Speaker Change: Financial services retail Telecom health care, how are you prioritizing those and do you have the capacity to go after all at once.

Speaker Change: So I will start.

Speaker Change: Build up we are.

From the origins of voice AI company, and so kayvon in particular, but the founding team and all the engineers.

Speaker Change: It grew with the company have built an amazing engine in the platform that we're now able to scale across multiple vertical. So we are a platform technology company.

Speaker Change: And then ultimately it comes down to where do we want a practice where is the biggest use case some benefit to our customer. So we knew early on automotive there is real benefits to being able to communicate with your car, while driving for safety reasons, and so forth and there was investment from the Oems to try to scale into that as Kevin mentioned, we went into customer service, we started with <unk>.

Speaker Change: Franz in that one made a ton of sense, because our technology differentiates based on how good. It is how accurate. It is when you order food you don't want just any old pizza, you want the pepperoni and sausage.

Speaker Change: Specifically and that's what our technology and our product does really well at so it made a lot of sense to focus on that as we expanded into enterprise verticals and brought some of our.

Speaker Change: Yes.

Speaker Change: Some of these new capabilities with these acquisitions.

Speaker Change: See a lot of runway and I mentioned this I think after the acquisition. It's not like we were we had a lot of runway with restaurants, I think I mentioned the scale of opportunity in the prepared remarks, we werent, maybe necessarily rushing to jump into the other verticals, both the opportunity with a really unique asset and a great time that made sense for us and I think really where the investment point.

Scott Buck: And Scott to your question is from a platform standpoint, I think the product is really good place now we can continue to invest in integration capabilities and we're doing that all the time and as I mentioned in response to Mike's question is we can take real production data and automate we can improve the software capability. So there's a bit of investment in product enhancement feature set that will continue to do the rail.

Scott Buck: Investment then becomes the go to market and go to market.

Scott Buck: When there is revenue opportunity in a market opportunity you want to go after it obviously you need to make sure the metrics make a lot of sense in a high ROI matter.

Scott Buck: Look at a lot of metrics LTV to CAC or just generally what is what is our ability to scale. How do we want to go to market and we look at that through multiple dimensions also where do we want to do it in terms of hiring direct sales reps versus where can we use channel partners to grow and one of the ways, especially in the enterprise side that we're seeing benefit is using <unk>.

Scott Buck: Indirect channel and channel partners.

Scott Buck: There is aligned incentives theres aligned motivations and that will allow us and sort of us.

Scott Buck: Investment lighter standpoint to go and capture the market. So we believe theres a lot of opportunity to go. After these markets. There is real demand I think there is demand for our solutions when we were.

Scott Buck: <unk> into Emilia one of the big questions for US was the cross synergy opportunity across product sets and we heard pretty resoundingly from the enterprise customers that that the capability on voice was a really interesting one where there was a lot of strategic interest and what we've done we did this with sync three acquisition. We've done we're doing it with the Emilia acquisition.

Scott Buck: How do we sort of displace third party voice engines with our own first of all we know that product very well, so and we know it's differentiated and better than the competition. So we want to put that out in front for the customer to benefit from.

Scott Buck: But there's also a cost benefit and then as I mentioned, the long term benefit to product development as we built it on our own solution. So I guess long winded way of saying the priorities or just what is it going to drive the highest outsized returns for us and we look at it from penetrating voice more deeply into the ecosystem, bringing together.

Scott Buck: This three pillar architecture and use cases like driving grabbing coffee, a new way to work or watching football on a Sunday and getting a pizza like these things are interactions that fit very well with our our strategy and that's what we're trying to drive in terms of conversational intelligence out into the market.

Scott Buck: Great I appreciate all that and then I wanted to follow up on the earlier question about the <unk>.

Speaker Change: Cross selling and up selling it sounds like you're already starting to see some momentum there I'm curious where is the sweet spot is that.

Scott Buck: Nine months out.

18 months out I mean, what does that look like I guess, the ramp or the cadence of how that's executed.

Scott Buck: It really depends I wish I wish I could give you a precise answer but we're already.

Scott Buck: I know of.

Scott Buck: A few really really interesting ones that can be very meaningful to us and I just not far enough along for me to give you a sharp timeline, but there are people who are.

Scott Buck: Some other players out there in a renewal period, that's coming up this year and we wanted to pounce on that opportunity and say we can take.

Scott Buck: Getting competitive win so there are there are deals in motion as we speak.

Scott Buck: Either we got to wait for sort of a renewal to timeline or in some cases is there a way to kind of breakthrough.

I see I see near term opportunities, but certainly as you get into the six to nine months and into next year. We think there is a lot of opportunity as part of the upsell is also integrating product stacks.

Scott Buck: We have a smart answering solution, we're really excited about it and it's an advanced.

Scott Buck: Answering capability, that's rolling out it we mentioned it in like fitness centers around the U S and it's a it's a solution that helps with up selling membership and so forth and Amelia had a similar product and now, bringing bringing those kind of together and integrating and allowing us to scale across enterprise and into some of the retail that we were already going after there is a lot of things to go after.

Scott Buck: And there is any.

Scott Buck: So I hesitate to put a timeline on it I can just tell you we're aggressively going after it.

Scott Buck: Maybe one last one is architectural things that you just we're still pretty early in the integration plan things have been going well, but just to make things work on the ground, sometimes it really getting aligned comp plans and making sure that people are incentive properly I will tell you generically, we really want to move fast on capturing customer.

Scott Buck: <unk>. So if we marginally err on the side of double paying here there between two groups like that okay. In the near term, we obviously need to normalize that over the medium term.

Scott Buck: But really for us it's about capturing scale, that's what we've been focused on for.

Scott Buck: With just.

Scott Buck: Just in recent past and will continue to.

Scott Buck: Going forward.

Scott Buck: Perfect I appreciate all the added detail and thanks for taking my questions guys.

Scott Buck: Thank you.

Speaker Change: As a reminder, ladies and gentlemen that star one to ask a question. Please.

Scott Buck: Please standby for our next question.

Our next question comes from the line of Glenn Mattson with Ladenburg. Your line is open.

Glenn Mattson: Hi, yes, thanks for taking the question Kevin I'm curious you mentioned military couple of times.

Glenn Mattson: Maybe wondering if you could expand if youre able to.

Glenn Mattson: What youre doing there and just between the military and that large energy deal.

Glenn Mattson: Just curious how that kind of these new vertical is fall into the sales funnel or do you have guys out there.

Glenn Mattson: <unk>.

Glenn Mattson: New verticals that haven't historically been the sweet spot.

Yes, so it's all similar to the core conversational AI and voice enabled in the world and there is there are a lot of opportunities for us.

Glenn Mattson: Making.

Glenn Mattson: Safer and more efficient.

Glenn Mattson: And so the one we announced.

Glenn Mattson: Partner.

Glenn Mattson: That helps us bring our solution to the government and military.

Glenn Mattson: Along the same lines.

Glenn Mattson: And as the partnership with a company called <unk>.

Glenn Mattson: That.

Glenn Mattson: We'll bring voice AI too.

Glenn Mattson: Police cars.

Glenn Mattson: Cardtronics and so on.

Glenn Mattson: And.

Glenn Mattson: Yes.

Glenn Mattson: We can see also that.

Glenn Mattson:

Glenn Mattson: We are the benefits when the economy is good people want to invest in AI innovation and that brings them to us.

Glenn Mattson: And then when economies challenging people want to invest in automation and cost savings that also brings them to us.

Glenn Mattson: So you will see both types of deals I mean, there are transactional deal for in restaurants.

Glenn Mattson: Generating new leased increased revenue will be up sell and there is some cost saving also.

Glenn Mattson: But there are.

Glenn Mattson: Let me automate calls and interactions that are very routine.

Glenn Mattson: The cost savings element.

Speaker Change: Alright, Thanks, Kieran and.

Glenn Mattson: I was curious just with the guidance and the.

Glenn Mattson: Just curious I know, there's a lot more SaaS than it used to be.

Glenn Mattson: There used to be some lumpiness of couple of years back when you get a large kind.

Glenn Mattson: Kind of on Prime auto deal.

Glenn Mattson: Gone away is that still something we should think about and just kind of overall.

Glenn Mattson: Overall your.

Out of the business.

Glenn Mattson: Has shifted quite dramatically with the addition of a $1 million as other things just the.

Glenn Mattson: Your ability to how confident you feel about the general ability to forecast and all that.

Glenn Mattson: Yeah, with the greater mix of SaaS and it certainly helps with predictability and.

Glenn Mattson: With respect to sort of historical deals.

Glenn Mattson: We.

Glenn Mattson: They're still out there I should say like we can.

Glenn Mattson: Sometimes in customer conversations when we're deploying particularly our edge product.

Glenn Mattson: <unk> launched.

Glenn Mattson: We want and commitments because if we're going to invest in a product like we want to make sure that the volume is there to provide a sufficient return.

Glenn Mattson: And then for a commitment sometimes the customer wants to negotiate a clearly on price like those are discussions that are ongoing all the time, so the benefit of having a more diversified revenue base as we have a lot more leverage in discussions and we can kind of go well here is sort of our clearing price and if if it doesn't meet that threshold then we're willing to.

Glenn Mattson: Either pause or just say, let's move on to some other type of discussion.

Glenn Mattson: But I do think general mix is certainly much more of a SaaS and recurring.

Glenn Mattson: I mentioned with the acquisition there are different pieces of what we got with the Mueller business Theres a professional services business.

And that is really important for us in terms of activating implementation and customization, depending on the customer environment the scale and complexity on those deals can be different so that can create a little bit of noise quarter to quarter.

Glenn Mattson: We'd love to do is obviously take standard implementation package of customers <unk> package, and then make it much more efficient going forward. So we can be faster to scale.

Glenn Mattson: And Theres also escalation support which generally can be recurring but were looking at those contracts in great detail and go on exactly which one makes sense for us over the long term. So that's the other sort of element to the integration that we're actively looking at.

Glenn Mattson: And then quite openly with a lot of our businesses and the new customers. We're going after there are certain customers, who actually prefer larger capital intensive customers, sometimes want licensing deals and that can create a bit of lumpiness in our results, but that's an okay thing I mean, we're really if I were to <unk>.

Glenn Mattson: Compared to where we were a year ago.

Glenn Mattson: I think first the diversity of our.

Glenn Mattson: Revenue base allows us to be much more Judy.

Glenn Mattson: Judicious with choices, we make on deals and not.

Glenn Mattson: Not compromising on price for example in delivering our solution to make sure we're getting full value for those at the same time.

Glenn Mattson: We want to go capture new markets, and where there is a specific threshold or type of revenue contract that a customer wants if there is real value to us we don't want to fall on principal and say well, we only do SaaS deals. So sometimes the licensing contracts makes sense as well so the licensing contract element I guess I'm going to your point. Unlike lumpiness those things can be lumpy.

Glenn Mattson: Lumpier than SaaS, certainly so there's a lot of different pieces to that puzzle, but net net I think to your question Glenn as we do have great line of sight, we have the strong backlog and we have a strong pipeline and we still think there is a lot more runway certainly going into the future years that we want to capture in terms of the massive Tam.

Glenn Mattson: That we're going after so.

Glenn Mattson: Hopefully that gives you a little bit of flavor of what we're.

Glenn Mattson: Great very helpful. Thanks, very much.

Glenn Mattson: Thank you.

Glenn Mattson: Please standby for our next question.

Speaker Change: Our next question comes from the line of Leo Carpio with Joseph Gunnar Your line is open.

Leo Carpio: Good afternoon, gentlemen, I've got two questions. The first question is regarding your platform. When you look at the platform are there any missing technologies or.

Leo Carpio: Our systems do you think you still need actually need to go and acquire and then secondly is on the auto POC contracts how quickly can those plc's move from.

Leo Carpio: Testing to full contracts AD revenue could it be like a 12 to 18 month horizon. Thank you.

Leo Carpio: Yes.

Leo Carpio: On your first question.

Leo Carpio: We tried to be a complete.

Leo Carpio: One stop shop for our customers and provide them everything they need.

Leo Carpio: In the majority of those cases those technologies are built in house over the last 20 years and we are very proud to outperform a lot of our competitors for example, I mentioned our latest Polaris.

Leo Carpio: The model.

Leo Carpio: Google by more than 20%.

Leo Carpio: And others.

Leo Carpio: But were also not shy about partnerships.

Leo Carpio: For example.

Leo Carpio: If a partner has a better text to speech that sounds better than some of our customers prefer that every even them that choice.

Leo Carpio: Kind of its own text to speech, but it also be partnerships that allow us to offer third party, Texas piece to our customers.

Leo Carpio: I think as a source of strength for sound hand to not be shy about partnerships. In addition to building in house.

Leo Carpio: So ultimately if our customers they've worked with us sometimes we source the technology from third parties, but ultimately they get it all from us.

Leo Carpio: And then what was your second question I'm sorry.

Speaker Change: But if you are seeing.

Leo Carpio: Yes, the POC.

Leo Carpio: If they are already live with us in production.

Leo Carpio: And in most cases, it's just a flip a switch so we.

Speaker Change: A number of.

Leo Carpio: Based on there.

Leo Carpio: Unique ids that we enable that you'll be sharing dose.

Leo Carpio: And we can do that very quickly if you can run the pilots and.

Leo Carpio: Do the audit and get the results and then to go live with more units.

Leo Carpio: So that's how it worked when we brought generative AI and large language models into still anticipate because in Europe last year.

Leo Carpio: It's a new OEM that is not using our voice assistance by default.

Leo Carpio: It would have to be.

Leo Carpio: It is a longer process.

Leo Carpio: But that's also the incredible power of our third pillar. It is bringing a lot more Oems to us to choose us for their default assistance going forward because of the monetization opportunity.

Leo Carpio: Alright, thank you.

Leo Carpio: Thank you.

Speaker Change: Ladies and gentlemen, I'm showing no further questions in the queue.

Speaker Change: That concludes today's conference call. Thank you for your participation you may now disconnect.